AdEPT Technology Group PLC Acquisition and extension of Banking Facility (6948G)
November 08 2018 - 1:00AM
UK Regulatory
TIDMADT
RNS Number : 6948G
AdEPT Technology Group PLC
08 November 2018
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE
REGULATION (EU) NO. 596/2014 ("MAR"). ON THE PUBLICATION OF THIS
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE ("RIS"), THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
AdEPT Technology Group Plc
("AdEPT" or the "Company")
Acquisition and extension of Banking Facility
ACQUISITION OF ETS COMMUNICATIONS HOLDINGS LIMITED
AdEPT Technology Group plc, one of the UK's leading independent
providers of managed services for IT, connectivity, unified
communications solutions and cloud services, announces that it has
signed an agreement to acquire the entire issued share capital of
ETS Communications Holdings Limited ("ETS Holdings") and its
trading subsidiary ETS Communications Limited ("ETS Comms"),
(together referred to as "ETS") both well-established UK based
specialist providers of unified communications services.
Acquisition highlights
-- Initial consideration of GBP2.5m less the net debt of ETS at 31 October 2018
-- Expected to be earnings enhancing from completion
-- AdEPT group revenue run rate anticipated to increase by approximately 5%
-- Highly complementary unified communications product set,
including Avaya IP Office and Ericsson-LG
-- ETS enhances AdEPT healthcare strategy with more than 200 GP surgeries as customers
-- Highly experienced vendor to remain with ETS
Strategic rationale
ETS offers its clients the delivery of unified communications
solutions, with particular expertise in the Avaya IP Office product
set. The highly skilled team together with the well-matched
customer base and product set at ETS will complement AdEPT's
existing unified communication services offering provided by the
Northampton office of AdEPT.
AdEPT and ETS have both adopted capital asset light strategies
which are highly cash generative and are dedicated to offering a
full suite of unified communication and data connectivity
services.
Information on ETS
ETS, founded in 1981, is an independent unified communications
services provider based in Wakefield with nearly 40 years'
experience. ETS is focused on providing unified communications and
connectivity to business customers and has a strong public sector
presence, including managing and supporting cloud-based telephony
solutions to more than 200 GP surgeries.
One of the vendors of ETS is to be retained in his current
capacity within the business for a period of at least 12 months
post-acquisition.
The statutory accounts of ETS for the year ended 31 March 2018
reported turnover, operating profit and profit before tax of
GBP3.16 million, GBP0.32 million and GBP0.31m respectively. Capital
expenditure in the year ended 31 March 2018 was insignificant. Net
and gross assets (pro-forma consolidated basis) at that date were
GBP0.10 million and GBP0.53 million respectively.
Consideration
Initial consideration of GBP2.5 million less the net debt of ETS
at 31 October 2018 ("Net Debt") is payable in cash. Pursuant to the
terms of the share purchase agreement, the effective date of the
acquisition is 1 November 2018. Further consideration of up to
GBP1.75 million may be payable in cash dependent upon the trading
performance of ETS in the 12 month period ended 31 October 2019.
The total consideration will be funded out of AdEPT's enlarged bank
facility, with headroom in the facility to support further
acquisitive growth.
Ian Fishwick, Chief Executive of AdEPT, commented:
"We are delighted to have acquired such a high-quality business
with a highly experienced vendor remaining with ETS
post-acquisition. With AdEPT having an existing specialist Avaya IP
Office operation in Northampton, the acquisition of ETS builds on
this capability and extends the geographical reach to Yorkshire and
Lincolnshire. ETS has a well-developed customer base with long term
relationships, which builds upon AdEPT's existing public sector
healthcare presence. The acquisition is expected to be earnings
enhancing from completion."
NEW BANK FACILITY
-- Debt facility enlarged to GBP35 million
-- Increased capacity to support acquisition growth strategy
The Board of AdEPT also announces that it has signed a GBP5
million extension to its existing GBP30 million 5-year revolving
credit facility agreement, enlarging the total debt facility to
GBP35 million.
The enlarged facility is to be provided by Barclays Bank Plc
("Barclays") and The Royal Bank of Scotland Plc ("RBS) on an equal
basis. The facility will be used by AdEPT to fund acquisition of
businesses that extend the AdEPT product set and by being part of
the AdEPT group, will benefit from economies of scale. The terms of
the enlarged facility remain the same as the existing facility.
Roger Wilson, Chairman of AdEPT, commented:
"We are delighted to have obtained the continued support of the
teams at RBS and Barclays to provide a larger syndicated debt
facility. This enlarged bank facility provides the Company with
additional funding to undertake the acquisition of ETS as AdEPT
continues with its strategy of acquiring earnings enhancing
businesses."
For more information please contact:
AdEPT Technology Group Plc
Roger Wilson, Chairman 07786 111 535
Ian Fishwick, Chief Executive 01892 550 225
John Swaite, Finance Director 01892 550 243
Cantor Fitzgerald Europe
Nominated Adviser & Broker
Marc Milmo/Catherine Leftley 020 7894 7000
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END
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